Casualty / Theft - No Replacement or Casualty / Theft - Replacement disposal method

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This topic describes the fields that appear in the Disposal tab or Enter Disposal Information dialog when you enter Casualty / Theft - No Replacement or Casualty / Theft - Replacement as the method of disposal and the date on which the asset was disposed.

Special information

Enter disposal information (for one asset)

Notes

  • The application does not automatically handle exchanges involving non-qualifying property; it assumes all losses are unrecognized.
  • Casualty / theft information transfers to Form 4684.

Fields & buttons

Enter the casualty or theft event that caused the disposition of the property. To report gains and losses from a casualty or theft, file a separate Form 4684, Part 1 for each casualty or theft event.

  • A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.
  • A theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking of property must be illegal under the law of the state in which it occurred and it must have been done with criminal intent.

This is the original basis of the asset calculated with depreciation allowed or allowable. (Depreciation allowed or allowable is the greater of depreciation that should have been taken or the depreciation actually taken.)

For a partial disposition, enter the adjusted basis calculated with depreciation allowed or allowable for the whole asset before it was divided.

Note: You can override the calculated amount by entering a different amount in this field. To remove the override amount and enter the application-calculated amount, choose Edit > Delete Override.

Enter the insurance reimbursement received.

Enter the amounts not yet received.

If a claim will be filed in the future or has been filed but reimbursement has not yet been received, include insurance coverage (less any deductible).

Other reimbursement includes:

  • The part of a Federal disaster loan under the Disaster Relief Act that is forgiven and, therefore, does not have to be paid back.
  • Repayments for damages and cost of repairs made by lessor.
  • Court awards collected (minus lawyer's fees and other necessary expenses).
  • Repairs, restoration, or cleanup services by relief agencies.
  • Payment from bonding company.
  • Some grants, gifts, and other payments if conditional.

Assets are considered grants and gifts only if they must be used specifically to repair or replace your property.

Other payment includes:

  • The part of a Federal disaster loan under the Disaster Relief Act that is forgiven and, therefore, does not have to be paid back.
  • Repayments for damages and cost of repairs made by lessor.
  • Court awards collected (minus lawyer's fees and other necessary expenses).
  • Repairs, restoration, or cleanup services by relief agencies.
  • Payment from bonding company.
  • Any other payments only if they must be used specifically to repair or replace your property.

See Form 4684 instructions for more information.

Enter the FMV (fair market value) of any other non like-kind property received as reimbursement.

Enter any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property.

Enter the expenses incurred obtaining the reimbursement.

Enter the coverage amount, even if a claim will not be filed.

Enter the deductible amount, even if a claim will not be filed.

Enter the amount at which the property would have been sold between a willing buyer and a willing seller, each having knowledge of the relevant facts.

Enter the fair market value of the entire asset after the casualty or theft. This field is not available if Casualty /Theft – Replacement has been selected as the disposal method.

This field displays the recognized gain for the Tax treatment.

To view an on-screen explanation of how the recognized gain is calculated, click the underlined field label to open the Gain Realized dialog.

Mark this checkbox to elect non-recognition by not reporting the gain. Facts relating to the conversion should be reported on the return. Even if no details are furnished, a failure to report the gain is considered an election not to recognize it.

See Regulation section 1.1033(a)-2(c)(2) and IRS Publication 547 for more information.

Note: This checkbox is available only for the Casualty / Theft - No Replacement method of disposal.

In this field, select one of the three options for handling the gain.

  • None (default): No gain is postponed.
  • Up to replacement: The gain is postponed up to the amount of the replacement asset's basis.
  • Entire: The entire gain is postponed.

Note: This field is available only for the Casualty / Theft - Replacement method of disposal.

This field displays the postponed gain.

To view an on-screen explanation of how the postponed gain is calculated, click the underlined field label to open the Postponed Gain dialog.

This field displays the gain recognized or the loss realized on the exchange.

To view an on-screen explanation of how the recognized gain/loss is calculated, click the underlined field label to open the Recognized Gain or Recognized Loss dialog.

Mark this checkbox to indicate that the disaster area loss will be taken in a previous tax year.

Select the appropriate property type from the drop-down list.

Click this button to open a dialog in which you can specify section 1250 information.

Note: This button is available only for assets with a 25-year or greater MACRS life.

Click this button to open a dialog in which you can view and adjust the asset's Book calculation.

Note: This button is available only if the Follow GAAP calculations for disposals checkbox is marked in the Setup > Treatments > Options dialog for the Book treatment.

Replacement like-kind asset group box

This group box appears only when Casualty / Theft - Replacement is the method of disposal.

When an asset is disposed of through a like-kind exchange or through casualty / theft with a replacement asset, the new asset is automatically created and the next available asset number is entered in this field.

Note: This field is available only for the Casualty / Theft - Replacement method of disposal.

Enter a description of the new asset.

Note: This field is available only for the Casualty / Theft - Replacement method of disposal.

Select the method by which the asset was acquired from the drop-down list.

Note: This field is available only for the Casualty / Theft - Replacement method of disposal.

Enter the fair market value of the asset received in the exchange.

Note: This field is available only for the Casualty / Theft - Replacement method of disposal.

This field displays the adjusted basis for the Tax treatment.

Note: This field is available only for the Casualty / Theft - Replacement method of disposal.

This field displays the adjusted basis for the Book treatment.

Note: This field is available only for the Casualty / Theft - Replacement method of disposal.

Mark this checkbox to elect to treat the entire basis of the replacement property as a current-year acquisition. When this checkbox is marked, an election statement prints with Form 4562.

Notes

  • This checkbox is automatically marked if you chose Do not follow IRS Notice 2000-4 and Reg 1.168(i)-6 from the Like-kind exchange field in the Setup > Treatments > Treatment Options dialog and the trade took place after 2/27/04.
  • This field is available only for the Casualty / Theft - Replacement method of disposal.

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